California regulators are talking to FERC and Mitsubishi Corp. representatives about trying to exert authority over the proposed liquefied natural gas (LNG) receiving terminal proposed for Long Beach harbor in Southern California.

So far, the proponents don’t see the state’s added intervention as affecting its aggressive timetable calling for construction of the project to begin early next year.

“Asserting authority doesn’t mean, in fact, you have authority,” said Tom Giles, an attorney and COO of Mitsubishi’s Sound Energy Solutions (SES), which has an application for an environmental assessment jointly before the Federal Energy Regulatory Commission and the Port of Long Beach, the designated lead state agency for the proposed harbor facility. Giles said that any way the CPUC jurisdictional question is resolved should fit SES’s time schedule.

Although it has not been widely talked about publicly, the CPUC sent a letter to SES last September, and discussions have been ongoing quietly in the background since that time. SES may not be concerned, but an attorney for the City of Long Beach municipal utility expressed some concerns, although he didn’t think there was any legal basis for CPUC asserting jurisdiction. Politically, he noted, the regulators might be able to obtain some oversight.

“I don’t think anything is going to cause a delay,” said Giles, who acknowledged that there has been no public debate on the jurisdictional issue raised by the CPUC, and that it is a legitimate issue percolating below the surface. “We still think we’re on schedule and expect to stay on it.

What bothers Pat Power, an Oakland, CA-based energy attorney and former CPUC administrative law judge who represents the Long Beach energy muni in various regulatory forums, is that there is no regulatory proceeding in which the city can appeal the CPUC’s assertion of jurisdiction. “There is no decision that deemed them (SES) to be a public utility where they would have 30 days to ask for a rehearing,” Power said. “It is just sort of a shot across their (SES’s) bow.”

Power said he doesn’t know the current state of the discussions on the issue, but he is aware of recent SES meetings with both FERC and the CPUC on the issue, and his understanding is that “FERC has given them (SES) all the assurances if and when they need FERC to say the CPUC has no jurisdiction, FERC would say that.”

Ultimately, Power and others indicated that the issue could be dropped into the state political pot at the legislature in Sacramento. If left to state politics, Power is concerned about the viability of the Long Beach muni’s current plans to own and operate the two-mile pipeline that will connect the LNG terminal to the Southern California Gas Co. transmission pipeline system.

“Someone has to build and operate that short pipeline, and our plan is that would be the City of Long Beach,” Power said. “Long Beach is not subject to regulation by either the FERC or the CPUC, and that is just fine with Long Beach. However, if the legislature were to change the state law, the CPUC could have jurisdiction over that pipeline.”

Power said that political turn of events would be “something (Long Beach) would be very concerned about.” He pointed out that it is one thing to read a current code and conclude legally the CPUC has no jurisdiction, but if you inject politics, anything might happen. “Then it becomes a little different exercise,” Power said.

The issue initially was raised by CPUC President Michael Peevey at a regulatory attorneys’ convention last September and followed up with a letter sent to SES before it had even hired a California-based legal counsel for its project. Now the firm has hired another well-known California energy attorney, Mike Day, a former CPUC executive director and a retained attorney for Enron in the late 1990s.

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